By Rachel Greszler | The Daily Signal
Unemployment claims spiked by 6.6 million last week, meaning more Americans became unemployed during one week than the total already unemployed before COVID-19 hit the U.S.
This marks a 3,000% increase compared to the levels of February’s weekly initial claims of unemployment, and it means the unemployment rate likely is around 9.7%—approaching three times the record-low 3.5% in February.
A lot has happened since last week’s unemployment claims were recorded.
For starters, Congress passed and President Donald Trump signed into law the CARES Act, including provisions intended to prevent unemployment as well as a counterproductive incentive to increase unemployment.
And then the president announced a 30-day extension to the nation’s “slow the spread” guidelines, with governors across many states continuing exceptional measures, including school and business closures.
If April 30 remains the date at which some businesses begin opening back up again, many of them may be able to keep their workers employed even if they’re not working temporarily.
In large part, that’s because the CARES Act’s new Paycheck Protection Program provides partially forgivable loans through the Small Business Administration.
Starting April 3, businesses and nonprofit organizations with fewer than 500 employees can apply to receive loans, as can those in the accommodations and food services industries (so long as they don’t employ more than 500 at one location).
If lenders are allowed to use automated approval processes to get money out the door quickly, the program could provide meaningful relief within a week or two.
The purpose of the loans is to help employers maintain their operations and employees, despite a slowdown or complete shutdown in operations. Businesses can use the funds for payrolls, utilities, rent, and the interest on mortgages and other debt payments. So long as employers maintain their payrolls, an amount equal to up to two and a half months of typical monthly payroll costs can be forgiven.
For larger employers, however, loans available through the CARES Act cannot be forgiven and they impose significant conditions that will deter many businesses from applying.
On net, more than half of U.S. workers are employed by small businesses and accommodation and food services companies that are eligible for forgivable loans. That should help prevent layoffs.
The catch, however, is a counterproductive provision in the CARES Act that provides an additional $600 per week in unemployment insurance benefits.
It makes sense in light of the temporary health crisis to hold workers harmless—providing 100% unemployment benefits compared to the typical 50%—but it doesn’t make sense to pay people more than they earned when employed.
The $600 bonus unemployment benefit means that a majority of Americans could make more money unemployed than working.
The median full-time worker in America would earn $2,300 more through four months of unemployment than they would while working.
And someone who works 30 hours per week at the minimum wage would gain $8,500 through four months of unemployment. In fact, such folks would make more in four months of not working than in an entire year of working.
Typically, employers have to lay off workers in order for them to receive unemployment benefits.
But the CARES Act places the ball in workers’ court. One of 11 provisions through which workers may qualify for unemployment insurance benefits is if “the individual has to quit his or her job as a direct result of COVID-19.”
That’s a broad provision that could make almost anyone eligible for benefits—even if they could maintain their employment connection while temporarily not working through measures such as mandated paid sick and family leave or the Paycheck Protection Program.
Moreover, now that employers know that workers actually can come out ahead through unemployment, they almost certainly will lay off some workers who they otherwise might have tried to retain.
But unemployment isn’t good for workers. Not only does it mean a loss of health insurance, which is particularly troublesome during a public health crisis. Being uninsured also can reduce future income and employment opportunities.
Moreover, if more workers sit on the sidelines until the $600 bonus unemployment benefit goes away July 31, businesses won’t be able to ramp production back up once it’s safe to do so. The economy will languish instead of rebound.
If policymakers want to prevent the unemployment rate from spiking to what the Federal Reserve projected could be 32%, they should fix the botched $600 bonus unemployment benefit by capping it at 100% of workers’ previous wages.
This one commonsense fix could prevent millions of lost jobs and help reboot the economy once this public health crisis subsides.
5 thoughts on “As national unemployment nears 10%, here’s how Congress can soften the blow”
In VT there is an over $500 additional unemployment benefit coming each week. So don’t expect people to return to work. And small businesses will be raped by the future increases in UI premiums if they do manage to convince someone to get off their tail.
We can be thankful we weren’t still in a STAGNATE economy like obama’s and
add 10 percent on top of 10 percent.. Thankfully Trump economy was scorching when this hit
and he’ll get us back where it was..
This is very strange. I just left a comment here, which never appeared. Did I say too much? Is this thing censored in real time?
I will say less this time. It’s about the plandemic, and why this mexican beer disease is here and why it was featured in the wargames plan conducted last year to implement their new WO, with the technocrats like william and linda gaits, and some generals in control. The plan is being implemented now! Its number is two hundred one. Please look it up on the google. The word, without hyphen, is plan-demic.
The site has a word filter that will reject certain words… with my slightly foul mouth I have to hit the back arrow and readjust my wording a lot…
This bad craziness has to end. Destroying the economy will kill more people and kill our future. The gmo disease is exaggerated, and the statistics skewed. Looks like every death is now attributed to it, though many appear to have had other conditions, but the communists know that they must never let a crisis go to waste in their grab for total control.
Why would Democrat gubners ban the use of an approved medicine which has had proven results in curing the disease? Obviously because they are the real sick ones. They want people to die. Power madness is their disease, and it is the most deadly of all.
I thought I made up a new word today, until I googled it: PLANDEMIC. Then I discovered PLAN 201, a planned mass casualty “war game” type event last year, with all the usual snakeholders including retired generals and Bill and Melinda Gates, who long have dreamed of a depopulated world, their exclusive paradise, with their doomsday seed banks ready to put it back together, after the events take place to kill off 90% of the population. They intend to use robots and mind-controlled slaves for labor.
They can pull off these wicked schemes because they sound so insane that almost nobody will believe they really meant business, until it’s much too late. The technology exists now for them to do it.
The wargames plan even proposed a CORONAVIRUS as being the pandemic! Now we are seeing this being played out, as our economy is shut down with no end in sight. This really is WAR!
Comments are closed.